Groups putting max effort into raising minimum wage

Rudi Keller @CDTCivilWar

Saturday

Aug 25, 2018 at 12:47 PMAug 25, 2018 at 12:47 PM

It has been more than nine years since the last increase in the federal minimum wage, only the third time in 80 years since the Depression-era law was enacted that low-wage workers have waited that long for a raise.

The last time Congress waited that long to act, Missourians voted to set a minimum wage above the federal level, with an annual cost-of-living adjustment. Supporters of Proposition B on the November ballot think Missourians are ready to act again to approve a series of increases that would set the rate at $12 per hour beginning Jan. 1, 2023.

With support from unions and liberal not-for-profit groups, Raise Up Missouri spent $1 million to get their proposal on the ballot.

The current state minimum wage, $7.85 an hour, works out to $314 a week, not enough to keep a single parent with one child from living below the federal poverty standard. The proposed increase, campaign spokesman Tony Wyche said in an interview, will provide low-income workers with more money for rent, food and other necessities and boost the economy at the same time.

“There is no county in the state of Missouri in which somebody can afford housing for that amount of income,” Wyche said. “These are working people who have to live in poverty and most make use of other federal programs just to make ends meet.”

So far, it looks like the debate will be one-sided — business groups that would normally be expected to fight the initiative haven’t formed an opposition campaign. Local government leaders are unlikely to take sides against it because the proposal only applies to private businesses.

It can’t apply to state government, because the Missouri Constitution limits the power of initiative by barring any proposal that spends money without also supplying the revenue through taxes or fees. It can’t apply to local governments because other provisions prohibit state government from imposing unfunded mandates on local governments.

The National Federation of Independent Businesses opposes Proposition B but is unlikely to take the field alone against it, state director Brad Jones said.

“We have small business people who have a visceral reaction to people telling us what you can pay,” Jones said.

The actual impact on members, however, will be mixed, he said. That is one of the difficulties in forming a coalition to oppose Proposition B, said Jones and leaders of other associations with members who pay at or near minimum wage.

“NFIB has such a diverse membership, we have folks who care deeply about it and those who don’t feel the effect at all,” Jones said.

Proposition B would increase the current minimum wage to $8.60 on Jan. 1 and add 85 cents per year until it reaches $12 in 2023. After that, the wage would be adjusted annually for inflation, as it is now. If Proposition B is defeated and inflation is 3 percent per year, the current $7.85 would increase to $9.10 by 2023.

U.S. MINIMUM WAGE

The first federal minimum wage was 25 cents per hour, enacted in 1938. The highest federal minimum wage after adjusting for inflation was $1.60 per hour, which took effect in February 1968 and is equal to $11.79 an hour today. The current federal minimum is $7.25 an hour, unchanged since January 2009.

Washington, D.C., and 29 states require minimum wages above the federal level. The highest current rate is $13.25 an hour in Washington, D.C. Several states have scheduled increases to go above that amount, with California and New York mandating $15 an hour in 2020 and 2021, respectively.

Missouri first mandated a state minimum wage in 1990, when Gov. John Ashcroft signed a law requiring businesses in the state to match the federal minimum. The federal minimum wage only applies to businesses engaged in interstate commerce. Missouri's minimum wage was set above the federal level for the first time in 2006, when 76 percent of voters approved a wage of $6.50 per hour with indexing for inflation.

The average wage for all industries in Missouri at the end of 2017 was $23.62 an hour, according to the Quarterly Census of Employment and Wages.

THE DEBATE

The debate over the minimum wage often is over its purpose – whether it should be a “living wage” covering basic needs or whether it is a “starter” wage intended to make a worker affordable to a business while they are learning their job.

“The minimum wage should always be set with an eye towards its effect on employment of those people receiving it,” said Peter Meuser, a professor of economics at the University of Missouri.

Meuser studies the employment of low-income workers and the impact of policies that impose work requirements on public assistance programs.

“Raising the minimum wage, if you put a substantial number of people out of work, doesn’t help them support their families,” Meuser said.

A parent working full time with a child receiving the current minimum wage is eligible for taxpayer help in the form of food stamps. The child is eligible for Medicaid to cover medical expenses.

Fair-market rents, the standard rates developed to determine federal housing assistance, range from $641 a month for a two-bedroom apartment in rural Moniteau County to $896 per month in St. Louis. Those rates would require two to three weeks of pay for a person with a child earning minimum wage to cover housing.

Raise-Up Missouri cites a 2015 study by the University of California-Berkeley that pegs the cost of public assistance to working families in the state at $2.4 billion in federal tax dollars and $335 million in state revenue.

“I can tell you that anybody who makes minimum wage or slightly above minimum wage, that no matter how long or how hard they work, it is never enough at the end of the month,” Wyche said.

The raises included in Proposition B will reduce turnover, attract new workers to the labor force and put more money into circulation, Wyche said.

“We feel that is an amount that will put money in worker’s pockets, that will put money back into businesses and help businesses grow, because people who earn low wages are going to spend any new income on things they need and they are going to spend it locally,” he said. “They are going to spend it at stores and businesses in communities for things they need. That is good all the way around.”

EMPLOYER IMPACT

Bob Goodrich, who owns the Forum 8 in Columbia and the Capital 8 in Jefferson City, as well as theaters in four other states, said he thinks a minimum wage increase will be good for his business. All his theaters except those in Indiana are in states with minimum wages above the federal minimum.

Goodrich employs about 1,500 part-time workers and 150 full-time. He said he expects he would have to raise ticket prices by 25 cents to cover the additional payroll.

“I think that is true of most restaurants and retail stores, that they could slightly adjust their price to cover a modest increase in income,” Goodrich said.

Goodrich admits he has mixed motives for supporting the increase.

“I just want people to have enough income they aren’t living stressful lives,” he said, giving one reason.

“I am hoping the minimum wage, perhaps a little selfishly, will give people more disposable income and they might be able to go to the movies now and again,” he said.

The most noticeable effect on attracting workers to jobs is likely to be seen among teenagers, Meuser said. The impact of a higher minimum wage for other groups is mixed, he said. With technology making it possible for machines to replace workers doing jobs such as taking fast food orders, employers will have an incentive to speed up their investments in that realm, Meuser said.

“Those incentives are ... the kind of thing that is going to reduce employment as wages are driven up,” he said. “The extent of the possibility of that substitution and the sensitivity to wages is an empirical question.”

The No. 1 issue for small businesses right now is finding qualified employees, Jones said. With unemployment near 3 percent in the state, wages are being driven up by competition, he said.

“It is kind of a workers' market,” Jones said. “Right now, in this economy you have a good chance of finding something you want to do and make more money.”

The minimum wage should not be so high that it discourages employers from taking a chance on someone, Jones said.

“I feel that minimum wage is a starter wage,” Jones said. “I don’t think it is intended to be something to live on. I think if you are a good employee you are not going to be at minimum wage very long.”

rkeller@columbiatribune.com

573-815-1709

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